Morgan Stanley Economic Index Reports Record Collapse

Financial services company Morgan Stanley’s Business Conditions Index, which examines the US economic performance fell by 32 points in June to a level of 13 after reporting 45 last May, marking the biggest decline since the 2008 global financial crises.

Analyst Ellen Zentner said that this drop presents a 'sharp deterioration in sentiment' across various sectors. "Fundamental indicators point to a broad softening of activity but, analysts did not widely attribute the weakening to trade policy," he added.

According to the Labor Department, the market added merely 75,000 jobs last May, raising fears of an economic slowdown following a worse than expected jobs record.

[caption id="attachment_56901" align="aligncenter" width="759"] Morgan Stanley Economic index chart[/caption]

In addition, another report last Thursday exposed an increase in US jobless cases, leading manufacturing activity growth to the slowest pace in two years.

Concerns regarding a trade deal between the US and China put a lot of pressure on stock markets last May.

However, assets were boosted this month as traders are anticipating a new cut in interest rates. Nevertheless, some investors are anxious about an obvious recession.

Morgan Stanley's index showed striking drops in hiring, Capital expenditure plans (CAPEX), and business conditions exceptions.

Zentner noted that the manufacturing subindex business conditions also dropped to zero, a decline that was driven by the recent cut in oil prices.